Strategy Simulation Game: Economics for Managerial Decision Making

Strategy Simulation Game: Economics for Managerial Decision Making

Introduction
This review paper shines a light on how vital the use of economic tools is in making managerial decisions as reflected in the simulation. Decision making process of management is described in different market structures. Just as it pertains to any for-profit business organization, the goal is to cut and maximize profits in each type of market structure. Based on the information provided in the simulation, Quasar Computers were involved in an extensive research in developing a pioneer product “the Optical Notebook.” In 2003, the company launched the first all-optical notebook computer and branded it the “Neutron”. This product is described as an energy saving optical technology with its rechargeable batteries capable of lasting up to three days; hence, transcending it into a leading technological product in its unique class. With the assistance of senior executives in the company, the decisions on operational and business strategies relative to a variety of market conditions are taken and discussed.
Monopoly
Quasar emerged as the only player in the market for its unique optical notebook computer; therefore, establishing a monopoly market structure. Within this monopolist market structure, maximizing profit tends to occur at the point where marginal cost equals marginal revenue based on the result shown by toggling the demand curve. In the initial scenario, it was presented that Quasar had the patent rights on all-optical technology for three years from the launch year leaving the company faced with the objective of maximizing profit in this monopolistic situation. In order to accomplish this, the price per unit is set at $2,550.00, as this enables Quasar to control the demand for the product while earning a maximum total profit of $1.29 billion. If for any reason the price is increased at this point, it will result in a decline in the profit as well as unit quantity demanded. The total quantity demanded at this price level was 5.3 million units....